Hedge funds have been caught short by Ocado and its US tie-up

As one Ocado analyst put it: "This deal will be a poke in the eye for the hedge funds who have bet against [it].". While Ocado sceptics were caught out by the Kroger deal, many more had seen it coming - and for one obvious reason: the threat to food retailers from Amazon. Kroger and Ocado seem to agree on everything: that Kroger is the retail chain best placed for a wider US roll out, that it will pay monthly fees for exclusivity to help Ocado with the capital requirements, and that it will take a 5 per cent stake in the UK group. Some of the agreement terms even suggest that Ocado has been able to up the ante. How did the hedge funds miss that? Or could they yet be proved right? Several risks certainly remain for Ocado, which might make bearish bets pay off.